A Pennsylvania-based real estate investment trust has signed an agreement to purchase the Casino Queen's property assets in East St. Louis for $140 million.
Steve Snyder, senior vice president of corporate development for Wyomissing, Pa.-based Gaming and Leisure Properties Inc., said the real estate investment trust has entered an agreement to buy the casino's 78-acre property, which includes the 38,000-square-foot casino, 157-room hotel, parking lot and RV park. The deal also includes Gaming and Leisure Properties loaning $43 million to refinance and retire the Casino Queen's outstanding debt.
Snyder said the casino's 700 employees purchased the casino and hotel a year ago. The employees will continue to own and operate the casino and hotel.
Snyder said the sale is pending approval from the Illinois Gaming Board and could close by the end of the first quarter of 2014.
According to the purchase agreement, the real estate investment trust will lease the property to the casino owners for about $14 million a year for 15 years with an option to renew for four successive five-year terms.
In a statement released Monday by Gaming and Leisure Properties, Chief Executive Officer Peter Carlino said that this was the company's first acquisition as a stand-alone company and represents one of the "robust opportunities in the gaming asset market," which the company is targeting.
"The Casino Queen adds a newly constructed asset with strong market share to our portfolio and further diversifies our operating partners, while strengthening our cash flow," Carlino said.
Real estate investment trusts operate income-producing property and provide real estate investment structure similar to mutual funds.
According to a press release from the real estate investment trust, Gaming and Leisure Properties was incorporated last February as a wholly owned subsidiary of Penn National Gaming Inc. Last month, Penn National Gaming issued common stock it held in Gaming and Leisure Properties to Penn National Gaming shareholders.
Gaming and Leisure Properties has assumed ownership of the real estate associated with 19 of Penn National Gaming's 21 casinos as Penn National Gaming pays rent to the new firm.
The current Casino Queen opened in 2007 and succeeded the initial Casino Queen riverboat casino that had operated along the East St. Louis riverfront since 1993.
The real estate investment trust also released a statement from Casino Queen President and General Manager Jeff Watson, who said, "This transaction offers us the opportunity to reorganize our capital structure, with a long-term solution that provides stability for our employee-owners. Further, by unlocking the value in our real estate assets, we are able to focus on efficiently operating our business in a less restrictive, asset-light environment."
Since the casino employees purchased the business, the casino has been operating as an Employee Stock Ownership Plan, or ESOP. This created a trust for all participating employees who are beneficiaries of shareholder dividends.
Contact reporter Will Buss at firstname.lastname@example.org or 239-2526.